‘Never spend more than this much of your income on a car,’ says millionaire finance expert

To save others from making this costly mistake, I came up with the 1/10th rule for buying a car. It’s simple: Spend no more than 10% of your gross annual income on the purchase price of a car.

Why? Because the upfront cost of a vehicle isn’t going to be the only thing you pay for, and cutting down your base price budget is the most effective way to save money.